The big data industry is growing rapidly. It is estimated that, by the end of 2019 its market volume in the US will have grown to $49 billion, from $7.6 billion in 2011. Unsurprisingly, organisations are seeing both the necessity and the advantages of collating intricate data and effectively analysing this to better their practices.
Data analysis has been adopted across many different areas of business practice and over the last decade or so has had a profound impact on industries such as engineering, manufacturing and banking. However, it is not just these industries that can benefit from effective data analysis – it can also be implemented into virtually any organisation. This has certainly been the case in terms of finance departments, supply chain management and also marketing practices. Companies are eagerly investing in data analytics, and in most instances have been successful.
However, there seems to have been a lot less enthusiasm to invest in analytics in the HR department. This is something that is backed up by the 2018 HR Barometer survey, conducted by Vlerick Business School and HR Consultancy, Hudson. The HR Barometer is used to find out the priorities of HR departments, how they perceive their own practices, and what areas their work mostly focuses on. The study, now in its 5th year, assesses the HR departments of Belgium’s 200 largest firms. Whilst the companies assessed may be located in Belgium, the results of this survey are applicable in a wider context, as all of the organisations surveyed operate on a global scale, and have an international focus.
The latest study evaluated analytics, and its use in the HR department. Although 95 per cent of participating organisations stated they collated personal data such as information on absence, progress, staff planning and performance etc., only a quarter of these organisations actually analysed this data. Effective use of data analytics in other industries and departments shows that organisations which perform analysis on the data they’ve measured can use it to achieve a much greater impact on business results. So, why aren’t the majority of firms analysing their HR data?
Well, there are a number of reasons as to why this could be the case. Traditionally, HR has of course been a human-driven and focused industry, and that tends to still be the case today. Due to this, HR has not typically been an industry at the forefront of embracing or utilising new technologies, or had an abundance of technically skilled workers. In fact, when you compare HR to many other industries, there is a very small number of workers who come from a technological background or have previous experience in implementing tech. This lack of experience is likely to be one of the reasons behind the slow pace of data analytics adoption and implementation in HR, compared to other industries.
There is also a lack of funding, or willingness to fund this, in HR departments. Many companies have invested substantial cash and resources into applying data analysis in other departments, such as finance and marketing, which then have a direct link to the profits of a company. HR, however, does not have this obvious, direct link, therefore many senior managers and decision-makers are often reluctant to invest in this area.
Similar to the lack of funding given to HR analytics, there is also a lack of sufficient time given to prove its return on investment. Senior management are eager to see a quick return on their investment in new technologies, but when it comes to data analysis, especially in HR, a long-term strategy is really needed to see its benefits. The longer employees’ practices and behaviour are analysed, the more reliable and accurate the results will be. To make data analytics effective in the HR function, senior management must be prepared to be patient. However, such long-term strategies have been proven to increase an organisation’s ability to identify trends and make predictions from this data, making the results well worth the wait.
GDPR does cause a small barrier in allowing firms to analyse their data, therefore it is important that, if the organisation does want to analyse and not just measure data, they receive confirmation from both employees and unions before doing so. This can too be a timely and often difficult process.
Of course, the benefits to organisations that use HR analytics are vast. Through measuring areas such as retention, sickness and leave, team performance and candidate experience, organisations are able to see patterns and trends in their work and practices, and identify what the firm is doing well and what environments are working for employees. Also, the opinions of stakeholders will only help organisations to become more efficient, perform better and improve their external employer brand.
The longer this data is analysed for the more likely it is that organisations will be able to spot roots for best practice and align to these. The ultimate goal is to identify the best possible environment for the organisation to maximise its performance. Understanding this is crucial to seducing senior decision makers into investing in HR analytics.
So, how can organisations begin to implement HR analytics? Well, there needs to be a two-step approach in doing so. Firstly, it starts with a solid awareness of the capabilities of data analytics for an organisation. Those who are in charge of deciding whether or not to implement analytics must really believe that doing so will hugely benefit the organisation. If this is the case, there must then be sufficient investment made both financially and time-wise, in order to ensure this works to the best of its ability. Whether this is hiring employees with the skills to analyse data, or hiring an external organisation who can do so, there must be agreement and acceptance that a long-term investment in HR analytics is necessary for its success.
Ideally, future HR departments should be split into three, equal teams; HR experts, business experts who know the industry and data crunchers. In doing so, HR will not miss the boat in terms of utilising new, emerging technologies and will be able to really benefit from HR data analytics.
Interested in HR analytics? We recommend the Mission Critical HR Analytics Summit 2019.
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Dirk Buyens is a Professor of Human Resources and a Partner of Vlerick Business School. He is also Head of the Vlerick HR Centre, leader of the HR Barometer survey project and Director of Open Executive Education Programmes at Vlerick Business School.
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